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$3.3-million budget cap tempts IndyCar team to Formula E

There is word that at least one IndyCar team will be competing in Formula E. Photo by FORMULA E

Formula E, the single-seater electric racing championship which launches next year, will impose a $3.3-million budget cap on teams, according to its chief executive Alejandro Agag.

It is understood that one of the top IndyCar teams will be unveiled as a Formula E entrant by the end of the summer along with several based in the UK.

“We have a €2.5m cap on the operating budget of the team -- anything spent on racing except the car. The chassis is almost spec but not the powertrain. It is not a chassis competition, it is an electric power competition. The manufacturers are calling us and saying we want to meet you so that you can explain to us how we can be part of it.”

He adds, “there are now 18 teams in the pipeline and we are going to announce more before the end of the summer.”

The first Formula E race will be held in September next year and it will host two U.S. races -- in Los Angeles and Miami.

So far two out of the 10 teams have been announced. One will be run by British outfit Drayson Racing, which last month claimed the electric land speed world record. The other will be run by motorsport boss Yu Liu and will be known as China Racing.

Bluebird, another British outfit associated with land speed records, hopes to run its own team and produce Formula E cars. However, it looks likely that Bluebird will have to wait until 2015 before it can build its own cars as motorsport’s governing body, the FIA, has already fixed the design for next year -- a process known as homologation.

The design which has been agreed comes from Italian firm Dallara which makes the cars for Formula One’s feeder series GP2 and GP3. The organisers of Formula E will supply Dallara’s cars to all of the teams which is another constraint on team costs. There are more.

Agag says that when additional car manufacturers join the series they will be obliged to support all the teams. “If you want to be a constructor you can spend as much as you want on making the car but you are obliged by the regulations to sell the car to at least two other teams -- the chassis, the powertrain and everything.”

They are known as customer cars and for years F1 has been toying with the idea of allowing them. At the moment, each team is required to make its own chassis and any move to change this is usually resisted by one of the outfits. F1’s boss Bernie Ecclestone recently said “I believe that customer cars would be a good thing but everybody needs to agree to it. [Team owner] Frank Williams is the one who is against it.”

F1 has also tried, and failed, numerous times to implement a budget cap. So why has Formula E succeeded where F1 failed?

By starting with a clean slate Agag has been able to set the terms for Formula E and teams have to accept them if they want to sign up. In contrast, the existing teams have rights in F1 and unanimous agreement is often required to make changes.

Agag has an accomplished history in motorsport as his Barwa Addax outfit won the GP2 teams title in 2008 and 2011. He has used his racing experience to ensure that Formula E swerves around the financial hurdles which plague F1. In turn, this has lured many of the top names associated with the series.

Famous F1 team McLaren is making the 300 bhp electric motor which will power the Formula E cars. Its sponsor TAG Heuer will handle the timing and former F1 supplier Michelin will provide the tires. Williams is supplying the batteries and Renault is the technical partner of the series.

Agag says that “sponsorship is coming along very well.” There are a total of 21 Formula E packages including title sponsorships of the ten races. The biggest deal will be naming rights of the Formula E cup and this is expected to sell for around $20 million annually.